It's a good idea to try to figure out when you'll claim Social Security well ahead of retirement. That way, you can get an estimate of your monthly benefit based on your filing age. And from there, you can do some number crunching to make sure you're making a smart decision.
Now there's a pretty wide range of Social Security filing ages you can choose from, the earliest of which is 62. There's technically no latest or final filing age, though you should know that there's nothing to be gained financially by delaying Social Security past the age of 70.
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But often, you'll hear that it's smart to wait until at least your full retirement age (FRA) to claim Social Security. That age is 66, 67, or somewhere in between, depending on when you were born.
Full retirement age is when you get your complete monthly Social Security benefit based on your individual wage history. Taking benefits at 62 could slash them by up to 30%, which is a financial hit you may not want.
But while claiming Social Security at 62 may not be your optimal choice, you may want to plan on doing so anyway. Here's why.
It's a good backup plan
It's not a given that you'll need to claim Social Security as soon as you retire. If you have a lot of savings, you may be able to take withdrawals from your 401(k) or IRA and hold off on Social Security to score a higher benefit.
But often, people retire and sign up for Social Security right away. That's something you may not be planning to do until full retirement age arrives. But sometimes plans can go awry.
It's not uncommon to be forced into an earlier retirement than what's desired for a variety of reasons. These could run the gamut from health issues to being ousted from a job due to age (something that's absolutely illegal but also hard to prove in many cases).
If you end up out of work at age 62, you may have no choice but to claim Social Security right away to keep up with your expenses. And that's why it may be a good idea to just plan on filing for benefits at 62 in the course of running your retirement numbers. That way, you're accounting for the lowest monthly benefit you might get. If you're able to file at any point beyond age 62, you stand to collect more money, which only improves your numbers.
It pays to play it safe
To be clear, planning for a smaller Social Security benefit and actually collecting one are two different things. If, come age 62, you're still working and in good health, then it could absolutely pay to delay your filing until full retirement age or beyond (there's an 8% boost coming your way for each year you hold off on filing past that point, up until your 70th birthday).
Rather, the takeaway here is that you should simply plan on filing for Social Security at 62 in case you end up being forced to do so. If you're able to make your retirement expenses work on a smaller monthly benefit, you'll be that much happier if your actual benefit ends up being far more substantial.
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